Asked by Nicholas Pride on May 06, 2024
Verified
Assume an asset costing $90,000 is expected to produce 400,000 units and have a salvage value of $2,000. During year 1, 75,000 units were produced; during year 2, 68,000 units were produced; and during year 3, 70,000 units were produced. Using units-of-production, compute the depreciation expense for each of the three years.
Salvage Value
The estimated value that an asset will realize upon its sale at the end of its useful life.
Depreciation Expense
The allocation of the cost of a tangible asset over its useful life, representing wear and tear or obsolescence.
Units-of-Production
A method of depreciation that allocates expenses based on the number of units a fixed asset produces, linking the expense directly to the asset's usage.
- Calculate depreciation expenses using units-of-production and other methods.
Verified Answer
VA
Virginia AguilarMay 08, 2024
Final Answer :
Year 1: $16,500 ($90,000 - $2,000)/400,000 × 75,000
Year 2: $14,960 ($90,000 - $2,000)/400,000 × 68,000
Year 3: $15,400 ($90,000 - $2,000)/400,000 × 70,000
Year 2: $14,960 ($90,000 - $2,000)/400,000 × 68,000
Year 3: $15,400 ($90,000 - $2,000)/400,000 × 70,000
Learning Objectives
- Calculate depreciation expenses using units-of-production and other methods.